Soaring prices and home loan curbs are forcing increasing numbers of buyers to turn to ever smaller homes as they struggle to get on the property ladder.
The median size of private homes sold dropped to 947 sq ft in the period from July last year to June this year, according to STProperty. This is slightly smaller than a Housing Board (HDB) four-room flat, which is typically around 969 sq ft.
STProperty, which looked at all private home transactions, including new sales and resales, also found 40 per cent of units sold over the past 12 months have been no bigger than 800 sq ft, which is the typical size of a one- or two-bedroom condominium unit.
The 947 sq ft figure was 3.3 per cent smaller than the median size of 979 sq ft in the first half of last year, before a total debt servicing ratio (TDSR) framework was imposed. TDSR, which took effect in late June last year, restricts a borrower's monthly debt repayments to at most 60 per cent of his gross monthly income. This has driven many buyers to aim for smaller homes with cheaper total prices.
The effect of TDSR on home sizes was even more pronounced within the new sales market.
The median floor area of new homes bought from developers in the past 12 months was just 753 sq ft, according to caveats lodged with the Urban Redevelopment Authority. That was 12.5 per cent smaller than the median size of 861 sq ft in the first six months of last year before TDSR was imposed.
A run-up in property prices per sq ft (psf) since 2009 after the global financial crisis has also played a part in shrinking private home sizes, STProperty said yesterday.
Non-landed home prices jumped 56.2 per cent from the second quarter of 2009 to the third quarter of last year, which was the peak, according to URA figures.
Coincidentally, the median size of private homes sold has been steadily declining since 2009 when the figure was 1,227 sq ft, STProperty noted in its report.
"While the TDSR framework is working well to ease home prices, the shrinking home size is another area that the Government might closely monitor... There are certain social implications should small homes become a norm in Singapore," said STProperty analyst Jason Chen.
This article was first published on July 10, 2014.
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